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Calculating Expected Return, Std Deviation of Stock J/Market

Please see attached file.

The market and Stock J have tire following probability distributions:
Expected Returns
Probability rM, rl
0.3 15% 20%
0.4 9 5
0.3 18 12
a. Calculate the expected rates of return for the market and Stock J.
b. Calculate the standard deviations for the marker and Stock J.
c. Calculate he coefficients of variation for the markdt and Stock J.

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Solution

Market

Probability (p)

0.3 0.15 0.045 0.135 0.015 0.000225 0.000067
0.4 0.09 0.036 0.135 -0.045 0.002025 0.000810
0.3 0.18 0.054 0.135 0.045 0.002025 0.000608
...

Solution Summary

Solution shows step by method to calculate Expected Return, Standard deviation and coefficient of variation for Stock J and Market.

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